Howard puts ethanol tiger in your tank

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Petrol blended with 5 per cent ethanol could soon be sold
without any labelling as the Prime Minister strives to revive the
biofuels industry in the face of a collapse in public
confidence.

Labels on fuels made with 10 per cent ethanol could also be
changed, so they do not act as a "warning" to consumers, despite
manufacturers' fears of damage to some car engines.

John Howard yesterday released the report of the Biofuels
Taskforce, which he had commissioned in May, and indicated he would
take the fight for ethanol into the boardrooms of oil companies and
fuel retailers.

The NRMA estimates 10 per cent ethanol fuel could save motorists
about 5 cents a litre.

But ethanol use in Australia has fallen from 75 megalitres in
2002-03 to a projection of only 23 megalitres in 2005-06, a drop of
70 per cent in two years. It now accounts for only 0.1 per cent of
the automotive fuel market.

Ethanol sales have fallen since 2002 when it was revealed
discount petrol stations in Sydney were selling blends with 20 per
cent ethanol, and some manufacturers warned warranties for new cars
were not valid if it was used.

But Mr Howard remains committed to boosting local production to
350 megalitres, or 1 per cent of the market, in less than five
years, arguing it offers cheaper fuel and health benefits through
reduced emissions.

The head of the taskforce, Conall O'Connell, said new cars "with
very few exceptions" could handle 10 per cent ethanol fuel blends.
Cars made before 1986 would be tested with 5 per cent blends before
the fuel was sold without labelling.

However, the Federal Chamber of Automotive Industries continues
to warn that many manufacturers of post-1986 vehicles still do not
endorse 10 per cent ethanol blends. Some say certain models do not
run satisfactorily on this amount. The chamber warns ethanol can
lead to early deterioration in fuel injection systems and affect a
car's performance.

Petrol prices will also be on the table when Mr Howard and the
Deputy Prime Minister, Mark Vaile, meet oil company chief
executives next week to discuss ethanol. But Mr Howard is adamant
he has no quick fix for the "painfully high" prices.

A petrol summit convened yesterday by the NRMA demanded more
government scrutiny of big oil companies, including a return to
petrol price surveillance by the Australian Competition and
Consumer Commission. It called on the ACCC to publish its findings
on oil refinery profit margins.

Motorists face a fresh spike in the price of fuel as the oil
market reacts to threats to US production posed by Hurricane Rita.
The international benchmark price of crude oil rose more than $US1
($1.30) to above $US68 a barrel on Wednesday night as the storm
swept towards Texas, the centre of US oil production.

Despite Mr Howard's endorsement, the taskforce report makes
clear that ethanol producers will need major government support to
be viable in the long term.

Mr Howard said the taskforce had found "potentially greater
health benefits from ethanol use than was previously thought".

Dr O'Connell was cautious, calling for local tests, but said:
"The work we did suggested on a preliminary basis there may be
significant potential health benefits."

The chief executive of the Chamber of Automotive Industries,
Peter Sturrock, said the Government had erred in not setting a 5
per cent maximum ethanol limit, to conform with Europe.

"There will continue to be a range of vehicle models, both new
and old, for which manufacturers are not able to recommend the use
of E10 petrol [with 10 per cent ethanol]."

BUT WILL IT ROAR?

- Five cents a litre cheaper

- May substantially reduce emissions

- A renewable energy source

OR WILL IT BITE?

- Manufacturers warn ethanol could harm some engines

- They say Australia already has low quality
fuel by developed world standards and this would worsen it